Mortgage rates shoot higher to begin new year
Mortgage rates shot up this week.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 3.99 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.95 percent a week ago and 4.12 percent a year ago.
The 15-year fixed-rate average grew to 3.44 percent with an average 0.5 point. It was 3.38 percent a week ago and 3.37 percent a year ago.
Mortgage rates often follow the same path as long-term bonds. When bond prices are falling and yields are rising, home loan rates usually move higher. In the past week, the yield on the 10-year Treasury has risen to 2.55 percent, its highest level since March.
“Mortgage rates are still lower than they were a year ago, but the momentum is clearly on an upward trend, as markets grapple with a growing consensus that the American economy is at full capacity, softer international demand for U.S. debt, and larger fiscal deficits on the horizon,” said Aaron Terrazas, a senior economist at Zillow.
Meanwhile, mortgage applications moved higher to start the new year, according to the latest data from the Mortgage Bankers Association. The market composite index — a measure of total loan application volume — increased 8.3 percent from a week earlier. The refinance index shot up 11 percent, while the purchase index climbed 5 percent.
The refinance share of mortgage activity accounted for 52.9 percent of all applications.